The ITC Doesn’t Like to Use its Early Disposition Procedure
Under agency rules, the ITC can designate a newly instituted investigation for early disposition, instructing the administrative law judge to hold special hearings and issue an early determination on a single, dispositive issue in the case within 100 days of institution. The purpose of the early disposition process is to save time and resources by resolving an obvious weakness in the complainant’s case before committing the parties to full discovery and an evidentiary hearing on all elements of a Section 337 violation. The agency has said that potentially appropriate issues for early disposition include domestic industry, importation, and standing.
So far, the ITC has been highly reluctant to use the early disposition procedure. Nevertheless, the agency received requests for early disposition from proposed respondents in three recently filed Section 337 complaints. One was granted and two were denied without much helpful explanation.
Dissolving Microneedle Patch Technology for Cosmetic and Pharmaceutical Use
The patent owner in this case is an independent inventor seeking to block imports of Acropass-brand skin patches by Raphas, a Korean cosmetics company. The accused patches include “microneedles” that purportedly treat wrinkles and acne. The complainant is pursuing this action without any legal representation and the complaint is not always coherent in its argument and presentation. It is unclear, therefore, whether there is a domestic industry product at all or whether any investments have occurred that could satisfy the domestic industry requirement.
Citing the various deficiencies in the complaint, respondents have asked the Commission either to decline to institute the investigation or to designate the case for early disposition on the question of domestic industry. The agency took the latter course and has now instituted the investigation with an instruction to issue an early determination within 100 days “as to whether the complainant has satisfied the economic prong of the domestic industry requirement.”
This is an excellent use of the early disposition process. It will save time and resources for the Commission and the respondent, who would otherwise be stuck paying legal fees and discovery costs for months until the complainant gives up or the case is finally dismissed. Addressing the weakest part of the complainant’s case up front also makes it harder for the complainant to force an undue settlement under the threat of expensive ITC litigation based on a highly questionable Section 337 claim. The end of the 100 day period is in the middle of April, although the complainant may decide to withdraw the complaint before then.
As noted in an earlier post, the ITC received a Section 337 complaint in late October accusing smart thermostats from six different companies (including Google, whose Nest thermostat is by far the most popular product on the market) of infringing a series of patents that describe monitoring and adjusting the usage of internet-connected thermostats.
Respondents then filed a request for early disposition, arguing that the asserted patents are invalid because they are “directed to the abstract idea of receiving, storing, and comparing data and lack any inventive concept that could arguably reduce this abstract idea to a patentable invention.”
At the time I noted that this investigation “looks like an ideal candidate for early disposition—respondents’ ineligible subject matter claim is certainly dispositive and fairly simple and straightforward to adjudicate.” The ITC, however, did not agree. In denying the request, the agency stated, “It does not appear from the request that the issue is likely to be dispositive with respect to all (rather than just some) of the asserted claims in the investigations.”
The ITC’s claim that early disposition on patent eligibility would not be dispositive is quite curious (since an invalidity determination would dispose of the patent owner’s infringement claim) and seems to depend on a procedural snafu during the pre-institution phase. As is common, the agency received two separate requests for early disposition from different respondents—one from Google and another from Daikin—but the ITC refused to consider Google’s request due to an apparent formatting error. Daikin, however, was only accused of infringing three of the four asserted patents and so could only challenge the validity of some but not all of the asserted claims.
Wearable Monitoring Devices
Like in Smart Thermostats, the respondents in Wearable Monitoring Devices requested early disposition on the question of patent eligibility. This case involves a complaint by Philips against Fitbit and Garmin. Respondents argue that “all the asserted claims are directed to forms of monitoring activity or collecting and analyzing data . . . [and] merely recite conventional sensors and high-level computing or communications operations, which are insufficient for patent eligibility.”
In its reply to the request for early disposition, complainant Philips contests the characterization of its patents as directed to an abstract idea. It also argues that respondents’ attempt to challenge multiple patents means their request raises “multiple issues” making it inappropriate for early disposition.
Interestingly, both sides cite previous ITC decisions granting or denying requests for early disposition of patent eligibility questions. Including the above-mentioned denial in Smart Thermostats, the agency has now considered four early disposition requests based on patent eligibility. The first request was in Portable Electronic Devices (Inv. 994) in 2016. That request was granted and ultimately resulted in early termination after the Commission ruled in respondents’ favor. The other two requests—in Data Transmission Devices (Inv. 1150) and Smart Thermostats (Inv. 1185)— were made in 2019 and both were denied. In both of those denials, the Commission noted that the issue was not “likely to be dispositive with respect to all (and not just some) of the asserted claims.”
The ITC ultimately denied respondents’ request and chose to institute the Wearable Monitoring Devices investigation on January 10 without designating the case for early disposition. In its denial notice, the Commission did not elaborate on the reasoning behind its decision, simply stating that “the issues raised may be too complex to be resolved within 100 days.”
Image Credit: Timo Newton-Syms